Analysis of Chinese economic growth under technology and consumer components of terms of trade: a time series study (1980–2021)

The existing literature widely explores the relationship between international trade and economic development. This research provides an innovative contribution by examining the impact of terms of trade (TOT), labor force, gross capital, stock trade, and investment on China’s economic growth from 1980 to 2022, employing the Autoregressive Distributed Lag (ARDL) long and short-run models. Furthermore, we divide terms of trade into consumer goods components (TOT food and TOT goods) and technological components (TOT computer & communication and TOT fuel). The outcomes of the Bound and Co-integration tests support the suitability of a long-run ARDL model, revealing a positive relationship between terms of trade and Chinese economic growth. Among the TOT components, TOT food and TOT goods promote Chinese economic growth, while TOT computer & communication and TOT fuel have an adverse effect. Additionally, investment, gross capital, stock trade, and labor force significantly boost China’s economic growth. However, the ECM (-1) outcomes indicate a 2098.48% adjustment from disequilibrium to equilibrium in transitioning from the short-run to the long-run. The study emphasizes the significance of export-oriented strategies, particularly technology, goods, and food exports, while addressing challenges like fuel dependency and global price volatility in fostering sustainable economic development.